Asset Retirement Obligations

12 Months Ended

Dec. 31, 2012

Asset Retirement Obligation [Abstract]

ASSET RETIREMENT OBLIGATIONS

ASSET RETIREMENT OBLIGATIONS

FirstEnergy has recognized applicable legal obligations for AROs and their associated cost primarily for nuclear power plant decommissioning, reclamation of sludge disposal ponds, closure of coal ash disposal sites, underground and above-ground storage tanks, wastewater treatment lagoons and transformers containing PCBs. In addition, FirstEnergy has recognized conditional retirement obligations, primarily for asbestos remediation.

The ARO liabilities for FES and OE primarily relate to the decommissioning of the Beaver Valley, Davis-Besse and Perry nuclear generating facilities (OE for its leasehold interests in Beaver Valley Unit 2 and Perry). The ARO liabilities for JCP&L primarily relates to the decommissioning of the TMI-2 nuclear generating facility. FES, OE and JCP&L use an expected cash flow approach to measure the fair value of their nuclear decommissioning AROs.

FirstEnergy, FES, OE and JCP&L maintain NDTs that are legally restricted for purposes of settling the nuclear decommissioning ARO. The fair values of the decommissioning trust assets as of December 31, 2012 and 2011 were as follows:

	2012		2011
	(In millions)
FirstEnergy	$	2,204	$	2,112
FES	1,283		1,223
OE	141		137
JCP&L	201		193

Conditional retirement obligations associated with tangible long-lived assets are recognized at fair value in the period in which they are incurred if a reasonable estimate can be made, even though there may be uncertainty about timing or method of settlement. When settlement is conditional on a future event occurring, it is reflected in the measurement of the liability, not in the recognition of the liability.

The following table summarizes the changes to the ARO balances during 2012 and 2011.

ARO Reconciliation	FirstEnergy			FES			OE			JCP&L
	(In millions)
Balance, January 1, 2011	$	1,407		$	892		$	74		$	108
Liabilities assumed in Allegheny merger	60			—			—			—
Liabilities settled(1)	(15		)	(1		)	(2		)	—
Accretion	97			59			5			7
Revisions in estimated cash flows(2)	(52		)	(46		)	(6		)	—
Balance, December 31, 2011	1,497			904			71			115
Liabilities settled	(2		)	(1		)	—			—
Accretion	104			62			5			8
Balance, December 31, 2012	$	1,599		$	965		$	76		$	123

⁽¹⁾  Includes approximately $10 million in reduced ARO liabilities for FirstEnergy as a result of deconsolidation of the Signal Peak joint venture (See Note 7, Variable Interest Entities).

⁽²⁾  During 2011, studies were completed to reassess the estimated cost of decommissioning the Perry and Davis-Besse nuclear generating facilities. The cost studies resulted in revisions to the estimated cash flows associated with the ARO liabilities and reduced the discounted liabilities as shown.